Taking AIM: Why should I float my company on AIM?
Jemil Visram, associate at Square One Law, offers advice on whether floating on AIM is right for a business.
IPOs are much in the news today. Flotations are proving more popular now than they have been for some time and high profile offerings such as Royal Mail have been given plenty of media column inches.
For smaller or emerging businesses throughout the region, a flotation on the Alternative Investment Mark (AIM) is an increasingly attractive proposition for a number of reasons.
First and foremost a flotation on AIM provides the opportunity to raise finance for the development of your business by granting access to long term investment capital via the initial, and any subsequent issue of shares. Increasing market confidence following the continued economic recovery coupled with the recent changes that allow shares in companies listed on AIM to be held in ISAs, means the AIM market has never been exposed to so much capital from individual and institutional investors alike.
Despite the management time and costs that are involved, a flotation on AIM remains attractive as companies are able to use their listed shares, and the ability to issue more shares, as currency for strategic mergers and acquisitions rather than financing such transactions using cash or debt finance.
Similarly existing shareholders are able to realise the value of their initial investment in the business by selling all or a portion of their shares. This gives businesses the ability to incentivise and reward executives and employees by issuing options and share awards linked to the long-term success of the company by aligning their interests with those of the shareholders.
A non-tangible benefit of any flotation is the status of being a publicly listed company on the London Stock Exchange. This will inevitably increase and heighten the profile of your company and enhance its status when dealing with customers and suppliers especially in the international business arena.
Finally, many companies choose to float on AIM rather than the Main Market as the admission requirements are less onerous and there are no rules as to the minimum size of the business or the number of shares which must be publicly traded. The corporate governance requirements and the continuing reporting obligations are less strict under the rules of AIM which allows the executive management team to focus on building and developing the company with less scrutiny and analysis by external commentators.
The corporate commercial team at Square One Law has experience of floating companies on both AIM and the Main Market. We recognise that deciding to float is a significant milestone in the lifecycle of your business and we take a pro-active approach by offering commercially practical solutions rather than mere options. We work closely with businesses and their advisers to ensure the process of floating a company proceeds to completion as smoothly as possible and advise on the continuing obligations that apply to a publicly listed company as well as its directors and shareholders.